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  1. #11
    Plinker

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    Thanks for the info, keep it coming.

    So now another question, by having a FFL I could become a dealer for various manufactures?

  2. #12
    Master curraheeguns's Avatar

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    Quote Originally Posted by 6birds View Post


    Wait until I bring all the kids at once!!

    I have had that treatment from you and it wasn't too bad once we got them all tied up!!

  3. #13
    Expert Michiana's Avatar

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    Interesting question

    Quote Originally Posted by Gaudard View Post
    Thanks for the info, keep it coming.

    So now another question, by having a FFL I could become a dealer for various manufactures?
    That’s a good question and obvioulsy I can only speak from personal experience. When I had my first FFL I primarily dealt with three distributors and no direct manufacturers, the distributores were SOG, RSR and CDNN. I am not sure if the Gunbrokers.com’s were active during that time period but I never did transfers until I started back up last fall. Back then AK-47’s were the popular guns and I sold a lot of those along with some hanguns and a shotgun or two. Today I do mostly transfer I get from Gunbroker for the specific reason you are asking about, supplier issues.

    Some manufacturers require you to be a stocking dealer to buy direct and that might not be allowed by your zoning when you got permission to have your business. Also you have to outlay some big bucks on inventory and take a specific mix of guns, some of which might be hard to unload. Some have buy ten and get one free but you are talking as much as ten thousand dollars and might end up with some you have to sell at bargin prices to get rid of. Being a stocking dealer has its plus side if you can afford it and have the customer base to sell to. Without street traffic it is a lot harder to sell guns in stock.

    The problem the small home FFL has is lack of volume to make them a valuable customer to distributors and manufacturers. Many distributors will only sell to store front FFL’s but you can find some that will work with you. Although they all tell you that they abide by “first in-first out” we all know that the big customers get preferred treatment with almost any company; it is just good business. If I had someone who ordered one hundred rifles at a time and another one who ordered one I would make sure the guy who orders a hundred at a time gets what he needs when he needs it.

    The small FFL has to look at all the factors involved in purchasing and reselling and shipping costs is a big one. I have distributors who charge from $22 down to $5 for shipping the same handgun. When you have small margins you need to take shipping costs into account as well as the actual price you pay for the firearm. Most distributors are fairly close price wise on an average but on occasion you can find a $20-$30 difference in a $500 gun. Add an extra $17 shipping cost to the $20 and you have $37 you have to add to the price you are charging your customer. That can break the deal if they are looking at an out of state direct internet store like Buds where they will not have to pay sales tax on the gun which an IN FFL has to collect.

    I have lost a lot of sales the past six months due to the innability to get product. I have had to cancel several rifles and pistols because my customers got tired of waiting months for their gun and found it for a little more someplace else; I can’t blame them one bit. The distributors are having trouble getting inventory and most manufacturers will not give their distrbutors even estimated delivery dates due to issues with their sub contractors supplying parts to them to manufacture the guns.

    Volume sellers also get better pricing then the home FFL and small mom and pop gun stores. You add all this up and it is easy to see where the small guy is at a big disavantage to make a reasonable profit when it comes to selling firearms. To be compeditve we have to drastically reduce our profit margins, sometimes to the point it is not worth the effort to buy and sell some guns. A couple weeks ago I asked the question on a post what people think is a fair markup and got anywheres from 10% up to 30%. My target is at least 10% but I don’t always get there. Items such as stripped lowers are as much work as selling a $1,000 gun and require the same paperwork as a customer transfer plus outlaying the money and then doing all the accounting involved in the buying and selling ofthe gun. Ten percent on a $130 item is a lot less than 10% on an $800 item but both require the same work from the FFL.

    I just looked at my records and I have purchased over $10,000 from Rock River Arms so far this year and had to cancel over $3,000 in guns on order at customers requests. To me this is decent money but to large retail stores it is a drop in the bucket. Had I been able to get product this past year that amount would have been several times what it is but unfortunately that was not the case. I can purchase RRA product from Midwest Gun Exchange Wholesale for about the same price I get it directly from RRA so that should tell you they buy for a lot less than I do. I sell most guns to my customers at a lower price than MGE does so you can see they have a much bigger margin than I do. Obviously they have a much larger overhead but that is covered in the selling price. The high volume is where they make their profit to stay in business.

    I have direct accounts with Rock River Arms, Stag Arms, DPMS and a dozen other manufactures and distributors. If they don’t have the product to send me and people can go to places like GunBroker.com and pay 5% more and get the gun in a few days that is often the way they go. I end up doing the transfer for them and collect my $20 which nets out to around $12 when all expenses are taken out. You have to do the math on each sale and see if it is worth while for you and your customer.

    If the market was like it was a couple years ago and you could find most guns in stock at the distributors and manufacturers it would be a lot more fun being a dealer. If you are in this for the money don’t waste your time getting set up; if you want to do it because you like guns and consider it a hobby that will allow you to make some spend money and meet like minded people go for it. Being retired it keeps me out of my wife’s hair and I get to fondle a lot of guns and meet some nice people in the process.

    Hope this added information helped. If you have anything specific PM me.
    Last edited by Michiana; 09-15-2009 at 13:33.
    Common sense is not that common.

  4. #14
    Shooter

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    Quote Originally Posted by curraheeguns View Post
    I have had that treatment from you and it wasn't too bad once we got them all tied up!!
    Wait until thye get older and find out that the Jeep was supposed to power itself, not get pushed around the yard!! Thanks again, ducks still decoying nicely.

  5. #15
    Plinker

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    Along the same lines, is there a thread with shops/individuals that will do FFL transfers?

  6. #16
    Expert danmdevries's Avatar

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    I started the process but was stopped cold very early into it. Long story short, a dream house hit the market with the caveat that it had been rezoned light commercial. But since it was grandfathered as residential I could purchase it but couldn't do rennovations and couldn't get a loan without having some sort of commerical interest in the property.

    I had many of my ducks in a row to buy this house (I mostly wanted it for the two story 4 car garage with attached workshop and powerventilated paintbooth as well as 30a 3ph power already there). Had a bunch of friends (MBA, CPA and Lawyer) help me out with paperwork etc for being able to buy the house and setup a business in order to get the house.

    What wound up killing my chances were two things. One: police chief or town council or someone in charge, don't recall whom, had to sign off on it. They refused. And two, I would be unable to rezone/split addresses between my personal and the business. Therefore I wouldn't be able to keep my own guns at my residence because they would be considered business property or soemthing along those lines, I don't remember everything.

    It's a very difficult and time consuming process, good luck doing it. If you're not going to be running the shop full time, it's probably not going to work out so well for you. Lots of good posts with good insight already, I just wanted to throw in my two cents from the perspective of the casual FFL. I wanted to have an amorer's certification and do transfers. Considering this building's location (exactly .25mile from the state line with IL) I thought it would be a strategic location for cross-state transfers. But as with 3/4 of my business ideas it never happened and I had to scratch the whole plan.


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